Analysts Expect Same-Store Sales Growth of 3% for Yum! in 4Q15



Same-store sales growth

Previously, we saw what Yum! Brands (YUM) is expected to report for its China division’s same-store sales growth. Let’s now turn our attention to the company’s global same-store sales growth and expectations for the remaining three divisions.

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Same-store sales growth by division

Wall Street analysts forecast that Yum! will report global same-store sales growth of 3% for 4Q15 and 3% for the following three quarters.

The company’s KFC division is expected to report same-store sales growth of 2.2% in 4Q15 compared to 4% in the corresponding quarter a year ago in 4Q14.

The Taco Bell division is expected to report same-store sales growth of 2.1% compared to growth of 6% in 4Q14. The Pizza Hut division is expected to grow by 1.1% from flat growth in 4Q14, making it the only division to have higher growth than in the corresponding quarter.

Next four quarters

For each of the next four quarters, KFC is expected to report a slowdown in same-store sales growth and so is Taco Bell. In contrast, the Pizza Hut division is the only division to report higher same-store sales growth in all four quarters year-over-year. Bear in mind that the Pizza Hut division contributes only 10% toward the company’s revenue, so its growth may not be enough to offset the slowdowns in the KFC and Taco Bell divisions.

The above chart excludes same-store sales growth forecasts for YUM’s China division, which primarily includes KFC and Pizza Hut as the dominant brands in the region.

To gain a more diversified exposure to restaurants, you may consider the Consumer Discretionary Select Sector SPDR ETF (XLY). XLY invests about 10% of its portfolio in restaurants. It also has holdings in other restaurants such as McDonald’s (MCD), Starbucks (SBUX), and Chipotle Mexican Grill (CMG).


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